Mixue Bingcheng, a prominent leisure tea drink chain operator, has recently filed for an initial public offering (IPO) on the Hong Kong Stock Exchange, shedding light on the thriving industry’s dynamics. Despite intense competition in China’s tea drink market, Mixue Bingcheng has secured the largest market share, holding approximately 11.2% of the gross merchandising volume and 32.7% of cups sold in the domestic freshly-made drinks market during the first nine months of 2023.
The IPO filing offers insights into Mixue Bingcheng’s ambitious expansion plans, reflective of the competitive landscape. Another player in the market, Guming Holdings, with around 9,000 stores, also filed for an IPO in Hong Kong recently, indicating the industry’s growth and potential.
Factors Contributing to the Popularity of Freshly Made Tea:
Affordability: Freshly made leisure drinks typically cost between 10 to 15 yuan (approximately US$1.41 to US$2.12), making them an affordable and popular choice, especially among students and young office workers.
Diverse Offerings: Beyond traditional milk tea, freshly made tea options include fruit tea and various coffee flavors, appealing to a wide range of customer preferences.
Customization: Brands like Mixue offer extensive menus, allowing customers to personalize their drinks by choosing flavor preferences, sweetness levels, and ingredient combinations.
Distinctive Features of Mixue Bingcheng:
Market Presence: Mixue Bingcheng gained popularity in lower-tier cities before establishing a significant presence in larger cities like Shanghai and Beijing. The majority of its stores cater to take-away orders, reducing rental costs for franchisees.
Franchise Network: With over 16,000 franchisees and more than 32,000 stores nationwide, Mixue has achieved broad market coverage. Only 4.5% of its stores are located in first-tier cities, emphasizing a strong presence in third-tier and below cities.
Product Affordability: Mixue’s iconic iced lemonade and affordable ice cream offerings, priced at 3 to 5 yuan, resonate with price-sensitive consumers.
Community-Centric Locations: Mixue strategically places its stores near community neighborhoods rather than central business districts, attracting customers looking for a convenient treat close to home.
Branding and Engagement: Mixue’s use of the “Snow King” cartoon figure as a brand ambassador, along with engaging audio and video content, has cultivated a loyal following.
Implications of Mixue’s IPO:
Capital Expansion: Mixue Bingcheng’s IPO provides an opportunity for capital infusion, enabling the brand to strengthen its market position and explore further expansion.
Competitive Landscape: Market leaders like Mixue and other established players may intensify competition, potentially posing challenges for smaller players seeking growth.
Overseas Expansion: Leading tea drink operators, such as Naixue and Heytea, are venturing into overseas markets, showcasing a trend of exploring growth opportunities beyond domestic borders.
Conclusion:
Mixue Bingcheng’s IPO signals the continued growth and competitiveness of the tea drink industry in China. As the market evolves, players are adopting diverse strategies, including overseas expansion and differentiation in product offerings, to secure their positions and attract a broader consumer base.
